Issued by: Department for Energy Security and Net Zero

Families and businesses will continue to reap the benefits of the clean energy transition in the coming decades.

• Families and businesses will continue to reap the benefits of the clean energy transition in the coming decades, as Britain steps up action to get off the fossil fuel rollercoaster

• Government sets next achievable and pragmatic target for long-term emissions reduction, building on the framework that has secured billions of private investment and economic growth since 2008, a “great British success story”

• Moving at pace to electrify Britain and deliver clean, homegrown energy will unlock greater energy security, lower bills for good, cleaner air, thousands of good jobs and action on the climate crisis following record British heatwaves

Families and businesses across the UK will continue to reap the benefits of the clean energy transition, as the government sets a new emissions target to further protect family finances, grow the economy and tackle the climate crisis.

As Britain faces its second fossil fuel price shock in 5 years due to the war in Iran, the government is pursuing policies which deliver tangible improvements to the lives of working people - centred on getting Britain off the rollercoaster of fossil fuel markets and onto clean homegrown power.

Today (Tuesday 2 June) the government has set out its proposed level for the seventh Carbon Budget, which sets a science-led target of ~87% emissions reduction in the period 2038 to 2042 – endorsed by the Environmental Audit Committee and the Climate Change Committee.

It comes as an independent report from the Energy and Climate Intelligence Unit, supported by analysis from the Confederation of British Industries Economics, today shows that the net zero economy supports over one million jobs in the UK, adding £105 billion in gross value added (GVA) to the UK economy in 2025 alone, as it continues to thrive as one of the UK’s fastest- growing economic sectors.

The new target is based on evidence-based assumptions about how the country will take a consumer choice-led approach to the adoption of technologies such as solar, batteries and EVs that will cut bills for families.

The level for the Seventh Carbon Budget has been chosen because:

• moving at pace to clean energy and net zero emissions is the best choice to reduce the exposure of UK families and businesses to more fossil fuel shocks, as the UK has seen following Russia’s invasion of Ukraine and the Iran War

• it maximises the benefits of the clean energy and net zero transition, including to the economy, health and nature

• it is consistent with the Paris Agreement aim to keep global warming to 1.5 degrees, to avoid climate disaster for future generations

This builds on the UK’s pioneering Climate Change Act 2008 - backed by British businesses, scientists, trade unions and civil society - which has provided a framework for combining economic growth and climate action, attracting billions of private sector investment and seen the UK become a global leader in clean energy industries. Since July 2024, the UK has seen over £90 billion of private investment announced in clean energy, including carbon capture projects in Teesside and nuclear at Sizewell C off the Suffolk coast.

The government’s clean energy and climate plans include:

• Cutting bills and costs: March saw the highest monthly solar deployment in over a decade and a record month for EV sales. Families installing solar could save up to £500 a year, electric cars can save drivers up to £1,400 annually to run and external estimates show new electric cars are now on average, cheaper to buy than petrol equivalents. Alongside this, the £15 billion Warm Homes Plan will deliver the biggest home upgrade programme in British history, cutting bills and lifting millions out of fuel poverty

• Delivering energy security: Half of the UK’s recessions since 1970 have been caused by fossil fuel shocks. The government is investing in renewable and nuclear energy to get the UK off the rollercoaster of fossil fuel prices, delivering a record-breaking renewables auction that secured enough clean energy to power the equivalent of 23 million homes. By 2050, the UK could cut its reliance on fossil fuels from around three quarters of our energy today to around 15%, while avoiding around £445 billion in fossil fuel spending over the next 25 years

• Jobs and investment: The government is driving a major clean energy jobs push, supporting over 400,000 additional jobs by 2030 across the UK. According to the CBI Economics report, in 2025, jobs supported by net zero businesses were 48%, or 1.5 times more productive than the UK average, generating £119,300 in economic value per full-time job. This led to higher-than-average wages, with these jobs generating an average of £43,142 to a full-time worker

• Cleaner air and nature recovery: Clean energy will help make the air cleaner across the country, leading to better health and a higher quality of life for people now and in the future. Cleaner air from the transition is estimated to deliver around 8,000 fewer hospital admissions each year by 2050, easing pressure on the NHS. Restoring peatlands and planting new woodland will deliver around £50 billion in nature benefits over the period to 2050, improving biodiversity, water quality, flood protection and access to nature

Without action, climate change continues to endanger the UK’s food and water security, exacerbate global population displacement and pose national security risks, including to critical infrastructure, in a context of increased global instability and households already suffering from the price volatility of fossil fuels. The Office for Budget Responsibility (OBR) is also clear that the costs of climate damage are getting higher, while the cost of the net zero transition is getting lower. This is about protecting the UK’s way of life and the natural world from significant dangers.

Energy Secretary Ed Miliband said:

"As Britain faces the second fossil fuel shock of the decade, the only way to protect family and business finances is to drive for clean homegrown power that we control.

"What has been achieved so far by businesses and communities across the country is a great British success story - cutting costs by upgrading homes, backing British businesses, supporting one million good jobs according to new analysis from CBI Economics, and protecting our beautiful countryside.

"Some people want to stick their heads in the sand and let our children face the consequences of climate breakdown - but this government believes in the timeless British value of protecting our country for generations to come."

Climate Minister Katie White said:

"The record-breaking May heatwave is another reminder that climate change is no longer a distant prospect. Increased heatwaves, flooding and nature loss are becoming the new norm for our country.

"That’s why we’re continuing to set a clear investment framework which will electrify Britain, maximising the benefits of clean power with cleaner air, warmer homes, energy security, investment into Britain and thousands of jobs in the industries of the future."

A delivery plan setting out how Carbon Budget 7 will be met will be published as soon as is reasonably practical after Parliament has approved the budget.

Legislating the carbon budget level for 2038 to 2042 now sends an economy-wide signal to investors and businesses, providing long-term certainty which will encourage investment and growth.

Stakeholder reactions

Dhara Vyas, Chief Executive at Energy UK said:

"The events of recent weeks have once again underlined the importance of pressing ahead with the move to clean energy to reduce our vulnerability to global fossil fuel price shocks and strengthen our energy independence in an uncertain world. The quicker we increase the amount of energy we get from our own clean sources, the less exposed our homes, businesses and economy will be in future.

"The fact that we now get over half of our electricity from low carbon sources is because the certainty and direction provided by the Climate Change Act and carbon budgets have given investors, developers and businesses the confidence to put billions of pounds into long-term projects in this country. As today’s CBIE report shows, the net zero economy is thriving and delivering above average economic benefits right across the country – continuing to support it will be key to delivering greater growth and prosperity for our country over the coming years and decades."

Ben Martin, Policy Manager at the British Chambers of Commerce, said:

"The energy transition presents significant economic opportunities across the UK, driving innovation and economic growth, as well as supporting jobs and skills.

"There are already so many innovative businesses that are developing low carbon technology solutions critical to supporting net zero. The Seventh Carbon Budget provides greater certainty for these firms and builds on progress already made.

"Businesses, alongside Chambers of Commerce, are playing a leading role in supporting the transition in areas such as nuclear power, offshore wind, solar, and carbon capture.

"Firms stand ready to work with government to strengthen energy security, drive investment, and support growth."

Verity Davidge, Director of Policy and Public Affairs at Make UK, said:

"With government beginning to harness the sector plans laid out in the industrial strategy and taking the first steps towards reducing electricity costs for manufacturers, we can see that the Seventh Carbon Budget underlines the unique opportunity that the clean energy economy offers for sustained industrial growth across Britain. A sustained growth in UK electrification supply chains could help modernise industrial processes and ensure that UK manufacturing can compete on an increasingly carbon free international stage in the years ahead."

Rt Hon Lord Alok Sharma, Chair of the UK Transition Finance Council and former Business and Energy Secretary, said:

"I welcome the government endorsing the independent Climate Change Committee’s overall emission reduction target out to 2042. It is vital this is backed by credible delivery plans which unlock economic growth, jobs and private sector finance, particularly to assist high-emitting sectors decarbonise in a timely manner.

"I therefore hope the government will act on the policy recommendations made by the Transition Finance Council, which will help to deliver finance to assist hard-to-abate sectors transition from grey to green."

Rachel Solomon Williams, Executive Director at Aldersgate Group, said:

"Today’s publication of Carbon Budget 7 is a major step forward in the UK’s plans to meet its net zero commitments. It is good to see the government is setting a target that should drive urgent action to drive down carbon emissions.

"As today’s new report by the CBI and ECIU also shows, net zero is delivering benefits right across the UK economy. The sector encompasses 23,000 firms, of which over 96% are small or medium size; it also supports over 1 million jobs, with wages at 11% higher than average.

"We look forward to the publication of a delivery plan to accompany this new carbon budget, providing the certainty businesses need and placing the UK’s net zero plans at the heart of our economic future. The plan must set out clearly what action will be taken across different sectors, especially on meeting growing demand for electricity across heating, transport and industry, as well as bringing costs down."

James Alexander, CEO of the UK Sustainable Investment and Finance Association (UKSIF), said:

"The government’s strategy for reducing emissions is a vital element of our economic positioning for the years ahead.

"Investors need certainty to allocate billions of pounds of capital to major low-carbon industries, and the carbon budget is an important demonstration of the UK’s ongoing commitment to decarbonisation.

"The benefits of this private financing are being felt among thousands of small and medium-sized companies, which are playing their part in supply chains up and down the country. The government must continue to match these emissions benchmarks with policies that make it even more attractive to invest in the UK."

Chris Norbury, CEO of E.ON UK, said:

"Every step forward on the energy transition is welcome but the prize is bigger than emissions alone. It’s the chance to transform a system built for a different century into one that works for customers where flexibility is rewarded, demand is dynamic and pounds end up back in people’s pockets. Action now means lower bills and energy security all moving in the same direction."

Tara Singh, Chief Executive as RenewableUK, said:

"Setting clear goals helps us to attract billions in private investment in the UK’s world-class clean tech industries, creating well-paid jobs throughout the country in wind, solar, energy storage and green hydrogen - our new powerhouses of economic growth. The clean power we generate cuts bills by pushing the most expensive gas generators off the system. Low-cost electricity from renewables protects billpayers from price shocks on volatile global fossil fuel markets which we can’t control, strengthening the UK’s energy security as we move closer towards energy independence."

David Hawkes, Head of Policy at the Institution of Civil Engineers (ICE) said:

"The ICE has long been clear that the UK doesn’t need to choose between its environmental and economic goals. The road to net zero is paved with opportunities to create jobs, strengthen energy security, and deliver better outcomes for people and nature.

"It’s encouraging to see the government maintain focus on these benefits, even in uncertain times, and to have confirmation that decarbonisation is already supporting economic growth. Infrastructure and the professionals who deliver it are central to this transition.

"The priority now is pace: the sector needs clear direction and consistent policy signals to keep up momentum. Clear priorities and stable, long-term investment will be essential to deliver at the speed and scale required."

Additional stakeholder reactions and editors notes can be seen here: [https://tinyurl.com/de2ncpbp]

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